The world economy is dropping into a lower gear, according to the Organization for Economic Cooperation and Development. The OECD pointed to the trade war between the U.S. and China as the culrpit, and said the world economy risks falling to a new, long-lasting, low-growth phase.
The global economy will see its weakest growth since the 2008-2009 financial crisis this year, slowing from 3.6% last year to 2.9% this year before a predicted 3.0% in 2020.
OECD chief economist Laurence Boone said:
“What looked like temporary trade tensions are turning into a long-lasting new state of trade relationships. The global order that regulated trade is gone and we are in a new era of less certain, more bilateral and sometimes assertive trade relations.”
Trade growth has fallen from 5% in 2017 to below zero, and investment growth is down from 4% to 1%.
The OECD lowered its growth forecast for the world’s biggest economies from 2.8% this year and 2.3% next year, to 2.4% and just 2.0%, respectively.